New Delhi, Oct. 16 -- A mistake in your income tax return (ITR) does not automatically mean you will face a penalty of 200% of the tax involved. The consequences depend on the nature of the discrepancy and the circumstances of the case.

Under the Income-tax Act, 2025, which came into force on 1 April 2026, the penalty for under-reporting income is 50% of the tax payable on the under-reported income. If the under-reporting results from misreporting, the penalty rises to 200% of that tax. Here's what taxpayers need to know.

The distinction lies in the circumstances behind the discrepancy. Under-reporting occurs when the income assessed is higher than the income reported in the return or previously assessed. It can also apply when an asses...